Rates tip FCL versus LCL scale

Despite a favourable

exchange rate for

exports the demand

for goods from

South Africa has not been high

and consolidation volumes have

shown this.

According to Terry Gale,

chairman of the Exporters'

Club Western Cape (ECWC),

exports have been slow since

the beginning of the year,

but are starting to improve.

Imports, he said, continue to

grow year on year.

“In terms of exports we

have not seen LCL volumes

increase significantly,” he said.

“Ongoing carrier rate decreases

are changing the breakpoint at

which shippers decide whether

to move goods as an LCL

or an FCL. As ocean freight

rates decrease the break-even

volume changes and so

customers are shipping

FCLs with less volume.”

He said at the same

time many customers

were also holding

back on LCL

shipments and

consolidating

in an FCL if their

inventory allowed it.

“Groupage operators

are however still investing

in infrastructure such as

warehousing in the Western

Cape,” he said. “A growing

trend in warehousing is the

investment in warehouse

management systems in

order to increase operational

efficiencies and provide

real time information to

customers.”

Operators were also

continuously expanding their

service offerings to ensure

well-established networks,

improved reporting such as

tracking, more certain delivery

times and end-to-end pricing.

“Ultimately, however, in

order for exports to grow the

exchange rate needs to remain

favourable and demand for

goods needs to increase. In

addition ocean freight rates

need to stabilise,” said Gale.